North and South Korea held their first official talks for years on Sunday, confronting decades of mutual distrust in a search for some positive end to months of soaring military tensions.

The working-level discussions, which began at around 10:00am (11:00am AEST) in the border truce village of Panmunjom, were aimed at building a framework for ministerial-level talks tentatively scheduled for Wednesday in Seoul.

The agenda will focus on restoring suspended commercial links, including the Kaesong joint industrial complex that the North effectively shut down in April as tensions between the historic rivals peaked.

"The overall atmosphere was ... calm and the discussion proceeded with no major debates," the South's Unification Ministry spokesman Kim Hyung-Seok told reporters after the morning session.

North Korea–South Korea relations

Between May 18 and 22, 2013 North Korea launched six short-range projectiles off its coast.

On April 26, 2013 South Korea pulled its factory managers from Kaesong Industrial Complex hours after the North reject a proposal for talks on the future of the complex.

On April 9, 2013 North Korea said the peninsula was on the brink of nuclear war and warned foreigners to leave South Korea.

On April 8, 2013 North Korea vowed to withdraw workers and "suspend operations" at Kaesong.

On March 27, 2013 North Korea cut off military hotlines to South Korea.

North and South Korea last held working talks in February 2011.

They have not met at the ministerial level since 2007.

North-South relations froze in 2010 when the South accused the North of torpedoing one of its warships, killing 46 people.

The agenda, venue, date and duration of the ministerial meeting were all discussed, before the meeting was due to resume after lunch.

The talks came about after an unexpected reversal on Thursday from North Korea, which suddenly dropped its default tone of high-decibel belligerence and proposed opening a dialogue.

South Korea responded swiftly with its offer of a ministerial meeting in Seoul, the North countered with a request for lower-level talks first and - after some relatively benign to-and-fro about the best venue - Sunday's meeting in Panmunjom was agreed.

In a further signal of intent, North Korea on Friday restored its official hotline with the South, which it had severed in March.

The two Koreas last held working talks in February 2011, and they have not met at the ministerial level since 2007.

The move towards dialogue has been broadly welcomed - given the threats of nuclear war that were being flung around in April and May - but there is sizeable scepticism about Pyongyang's intentions.

"The North Korean offer has all of the hallmarks of Pyongyang's diplomacy," said Stephan Haggard, a North Korea expert at the Peterson Institute for International Economics.

"Pyongyang is 'sincerely' and 'magnanimously' inviting the South to fix, and pay for, problems of the North's own creation," he said.

It was the North's decision to withdraw its 53,000 workers in early April that closed Kaesong.

The North also wants to discuss resuming tours by South Koreans to its Mount Kumgang resort. These were suspended after a North Korean soldier shot dead a South Korean tourist there in July 2008.

Kaesong and Mount Kumgang were both significant sources of scarce foreign currency for North Korea, which is squeezed by UN sanctions imposed over its nuclear weapons program.

"The offer was transparently timed to coincide with the Obama-Xi summit, suggesting - probably wrongly - that the North is willing to do something substantive to unfreeze relations on the peninsula," Mr Haggard said.

China, the North's sole major ally and economic benefactor, has been under US pressure to restrain its neighbour and has pushed Pyongyang to drop its destabilising strategy of confrontation.

On Saturday, Mr Obama and Mr Xi closely consulted on North Korea's recent nuclear brinkmanship, and agreed to work together on the "denuclearisation" of the Korean peninsula, US National Security Advisor Tom Donilon said.

Analysts say South Korea will approach talks with Pyongyang with a caution born of long experience.

President Park Geun-Hye, who took office in February with a promise of greater engagement with Pyongyang, has welcomed the initiative.

But she remains adamant that any substantive dialogue can only take place if the North shows some tangible commitment to abandoning its nuclear weapons programme.

North Korea has been equally emphatic in declaring its nuclear deterrent is not up for negotiation.

It was the North's nuclear test in February - and subsequent UN sanctions - that triggered the recent crisis that saw Pyongyang threaten both the South and the United States with pre-emptive nuclear strikes.